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If we accept this race-to-the-bottom style of competition, then we're basically saying that 21st century America should look more like late-19th century America.

For the last two decades, we’ve heard many myths purporting to explain the loss of American manufacturing jobs. CEOs, for instance, typically say they have sent jobs overseas because they can’t find skilled American workers. Conservative economists say the giant sucking sound is that of technology replacing obsolete workers. And conservative politicians say job loss is the result of high corporate tax rates, even though ours are among the lowest effective corporate tax rates in the industrialized world.

All of these explanations are fables with a purpose: they are designed to deny the obvious by pretending that exploitation and policies that encourage exploitation aren’t the root cause of offshoring. More specifically, they ask us to ignore the fact that tariff-free trade agreements and tax loopholes incentivize companies to shift production to countries where slave wages, environmental degradation and human rights abuses are tolerated.

But now at least a few manufacturing jobs are suddenly coming back to America, and the same CEOs, economists and politicians who have tried to squelch any honest discussion of exploitation are inadvertently admitting that exploitation has always been the manufacturing economy’s invisible hand. They are admitting it when they concede that jobs are returning primarily because American wages are precipitously dropping at the same time Chinese minimum wages have slightly risen–from awful (in some places, $100 month) to a mere terrible (still just a $240 a month).

This is not some fringe theory. It’s a widely acknowledged fact.

President Barack Obama admitted it when in his State of the Union address he said jobs are returning because “it’s getting more expensive to do business in places like China.” Economists at the Boston Consulting Group underscored it when in August they said employment growth is happening because rising Chinese wages are “eroding China’s cost advantages” while the United States “is becoming a lower-cost country” as American wages decline. And GE Consumer & Industrial CEO James Campbell reiterated it when he recently told The New York Times that “making things in America is as viable as making things any place” because domestic labor costs are now “significantly less with the competitive wages”–read: far lower wages–now accepted by American workers.

Now that this consensus is finally out in the open, the real question for America is simple: Do we accept an economic competition that asks us to emulate China?

If our answer is yes, then we should support current state legislative proposals to reduce child labor protections; back federal legislation to eliminate all environmental, wage and workplace safety laws; and applaud corporations that crush unions and further reduce wages in America. We should also probably encourage our fellow countrymen to follow Apple Inc.’s Chinese workforce by simply accepting $17-a-day paychecks, 12-hour workdays and six-day workweeks. Indeed, if we accept this race-to-the-bottom style of competition, then we’re basically saying Chicago should look more like Chengdu; our heartland should look more like the poverty-stricken interior of China; and 21st century America should look more like late-19th century America.

If, alternately, we reject this dystopian future, then it requires us to more seriously consider things like tariffs, industrial policy, tax incentives for domestic investment and Buy America laws for government procurement. In other words, it requires us to declare that access to the American marketplace is no longer free–that corporations who want to sell things to Americans must play by our wage, environmental and human rights rules no matter where they make their products.

Between these two paths, there is no “third way”–and doing nothing will likely mean that the uptick in American manufacturing jobs will prove fleeting. A choice, therefore, must be made–and it should be a no-brainer.

David Sirota, an In These Times senior editor and syndicated columnist, is a staff writer at PandoDaily and a bestselling author whose book Back to Our Future: How the 1980s Explain the World We Live In Now—Our Culture, Our Politics, Our Everything was released in 2011. Sirota, whose previous books include The Uprising and Hostile Takeover, co-hosts "The Rundown" on AM630 KHOW in Colorado. E-mail him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

What I will never understand is who these MBA jerks think is going to buy these products when nobody has a decent job.

Posted by KentCDetrees on 2012-06-25 14:28:54

Thanks for this article! Gonna write my essay on this topic today! Posted by Mariia on 2012-03-12 05:17:38

I have discussed this same subject with a friend who works for a financial company. He said this about a year ago. He used European companies as his examples, noting how many have moved some production to mostly southern states. The low wages, and fewer worker protections made them very attractive. It's no wonder that the downward pressure increases every year to take less and work more. The motivations aren't even cloaked anymore. Profit before everything else. I'm fortunite enough to live in an area with a growing workers cooperative movement. It's small, but growing. Creative thinking and working together, without exploiting one another, has work before in troubled times, why not now?
Posted by Michael Larson on 2012-02-19 08:54:45

I think it's inevitable in a global economy that there will be a leveling of standards of living--countries like China will see theirs go up, countries like the U.S. are going to have to adjust to less. The up side of this is that we have to choose our priorities. We can no longer consume new goods as if there's no tomorrow, but will have to focus on what's truly important. Frankly, I find a simpler life appealing, but as part of reordering our priorities and living more humanely, we must provide the basics to all.Posted by Deborah Montesano on 2012-02-18 00:55:09

It is pleasure a going through your post. I have bookmarked you to check out new stuff from your side.
carbon cagesPosted by Fiona Hills on 2012-02-18 00:01:19

My understanding is that it's only more cost-effective for corporations to invest in low-wage developing nations for the most labor-intensive industries, e.g. textiles, call centers. Otherwise, proximity to markets and sources of supply, social stability, and most importantly, the greater productivity of 1st world workers, make developed nations the most cost-effective place to invest. I don't know the up-to-date numbers, but my understanding is that the vast majority of foreign direct investment still occurs among developed nations.
For all these reasons, I don't think there's any serious danger of wages in the US declining all the way to Chinese levels, and while some of China's recent wage uptick is doubtless cyclical, much of it represents the growing productivity of Chinese labor. However, the danger is that the increase in foreign competition will exacerbate deflationary pressures on the global economy, increasing instability and eventually pushing wages and prices downward across the board -- a classic 1930s-style deflationary crisis.
I think the best policy we could take toward 2nd and 3rd-world nations is that taken by the EU toward less-developed members such as Spain and Ireland in the '70s, that is, subsidizing investment in these nations in return for a commitment on their part to ratchet up to core standards regarding wages, working conditions, and consumer and environmental regulations. Posted by Immanent_Universal on 2012-02-17 19:12:41

We don't need to defend our porous borders to help US workers deal with race-to-the-bottom competition - we can raise the bottom with global unionization and safe working condition law. We can also reduce capital flight from USA by global wealth taxation standards.
Posted by briancady413 on 2012-02-17 10:24:55